High fuel prices have given Australia's Labor Prime Minister Kevin Rudd his biggest setback since winning office, a poll showed on Monday.

Rudd, who has enjoyed the highest approval ever seen in Australia since his September election win, saw his popularity slide 2 points to 67 percent and public disapproval rise 5 points to 27 percent, a Nielsen poll in Fairfax newspapers showed.

"I've been talking to working Australians for weeks and months about the impact of petrol prices on them and hearing their message loud and clear," Rudd told reporters in a press conference after the poll results were published.

The survey showed eight in 10 Australians wanted the government to combat fuel pump prices at record highs by cutting taxes on fuel, a move both major political parties have resisted. Although low when compared to pump prices in Europe, fuel prices are a political flashpoint in Australia, with many people owning large family cars and SUVs to cover long road distances in the only country to span an entire continent.

Rudd has promised to help families struggling with high fuel costs and inflation touching 16-year highs through a combination of income tax cuts, subsidies for fuel-efficient hybrid cars and a national price watch scheme to monitor petrol pump prices.

"This is a global problem. We have the greatest global oil shock in 30 years, which is reverberating across every economy in the world. But we have a plan going forward," Rudd said, already eyeing the next national election in late 2010.

The poll preceded what is tipped to be a rocky fortnight for Labor, with the conservatives threatening to block key budget measures in the upper house Senate, including a planned petroleum industry tax on previously exempt condensate.

Worth A$250 million ($235 million) each year, the 24-year-old exemption was put in place to help resource companies develop major North West Shelf oil and gas fields off the remote west Australian coast.

"What they are proposing is economic vandalism," government spokesman and Senator Chris Evans told local radio.

"This is about us delivering on our election promises and making sure we have got a budget surplus that allows us to keep downward pressure on inflation and interest rates," Evans said.

With the conservatives to lose Senate control to a potpourri of Greens, anti-gambling and Christian-values lawmakers in weeks, Evans said blocking a condensate tax could slash billions from the expected A$21.7 billion 2008/09 budget surplus. ($1=A$1.06)